Individual income and corporate franchise taxes; subtraction for global intangible low-taxed income established, corporate net operating loss deduction increased, and dividend received deduction increased.
The proposed changes aim to modernize and align Minnesota's tax laws with federal regulations, particularly concerning how corporations handle net operating losses and dividends received from other corporations. By increasing the corporate net operating loss deduction and dividend received deduction, the bill intends to provide greater financial relief to businesses, which may translate to higher investment and employment opportunities within the state.
House File 947 focuses on amendments to individual income tax and corporate franchise tax regulations in Minnesota. The bill proposes establishing a subtraction for global intangible low-taxed income, effectively allowing corporations to exclude amounts included in gross income under section 951A of the Internal Revenue Code. This could have considerable implications for how multinational corporations report and pay state taxes, potentially enhancing their financial positioning against domestic competitors.
While supporters of HF947 argue that the reforms would foster a more competitive business environment and stimulate economic growth in Minnesota, critics express concern about the potential long-term impact on state revenue. By offering significant deductions, there is apprehension that it may reduce the state’s tax base, leading to funding issues for public services. There are also discussions around ensuring that such tax relief does not disproportionately benefit large corporations at the expense of smaller businesses and individual taxpayers.